Tag: family-members
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The Parental Immunity Doctrine: Is Insurer Bad Faith an Exception or Should the Doctrine Be Abolished?
A boy and his dad got hurt in a car crash in Florida. The dad’s wife’s car was involved, and the boy’s mom tried to get money from their insurance. The insurance company wouldn’t pay even though the crash was partly the dad’s fault. After a long court case, the insurance company was found to…
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Invoking the Rule During Depositions? Absolutely Maybe
When someone invokes the rule during a trial or deposition, they are asking for the rule of sequestration to be implemented. This means that certain witnesses must stay outside of the room while others are testifying, so that their testimony isn’t influenced by what they hear. However, the rule doesn’t apply to parties involved in…
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Pension Simplification: The Ultimate Oxymoron?
The Tax Reform Act of 1986 made big changes to retirement plans, making things more complicated and expensive for employers. But in 1996, the Small Business Job Protection Act was signed into law, addressing concerns and making changes to simplify 401(k) plans. One change was using data from the previous year for testing, instead of…
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Be Alert for Financial Exploitation of the Elderly
After World War II, the U.S. has seen a huge amount of money accumulated. Now, a lot of that money is being passed down to the next generation, with estimates predicting over $60 trillion transferred in the next few decades. This isn’t just about the super rich; there are millions of millionaires in the U.S.…
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Planning for Large Estates After TRA 97: A New Look at Some Old (Charitable) Friends
The Taxpayer Relief Act of 1997 didn’t actually provide relief for many rich people because the estate tax credit is only available for estates worth less than $10 million. This means that larger estates still face a 55 percent tax rate, just like before. As a result, estate planning techniques like life insurance trusts and…
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TRA 97 Is Not the Only Reason to Review Existing Estate Plans Involving Closely Held Stock
The Taxpayer Relief Act of 1997 provided a tax benefit for family-owned businesses, allowing an exclusion from a person’s taxable estate. This is important to consider when making estate plans involving closely held stock. There have been significant cases and IRS rulings that affect estate planning for closely held stock. In a hypothetical scenario, a…
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Estate, Gift, and Trust Tax Changes Made by Taxpayer Relief Act of 1997
In 1997, the Taxpayer Relief Act made changes to estate and gift tax laws. It increased the unified credit for estate and gift taxes, meaning people could exempt more money from these taxes. The maximum federal tax rate also increased for very large estates. However, compared to previous tax acts, the overall impact of the…
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Rethinking the Valuation of Family Limited Partnerships Holding Passive Assets
Appraisers have a hard time figuring out how much to discount the value of an interest in a family limited partnership (FLP) because FLPs are different from regular business entities. Non-family members wouldn’t want to buy into an FLP, so the discount could be as high as 80%. But owners wouldn’t want to sell at…
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Estate of Simplot: The Tax Court Applies a Significant Premium to Voting Privileges
The Simplot case involves the transfer of stock in a family-owned company after the founder’s death. The court ruled that a “premium” should be applied to the transfer of minority voting stock, and that the premium for a controlling interest would be substantially greater. This decision could impact estate and gift tax reduction strategies involving…
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Intermediate Sanctions Under 4958: An Overview of the Proposed Regulaitons
Last year, new rules were proposed that would impose taxes on people in leadership positions at nonprofit organizations who receive too much money from the organization. These rules have been criticized for making it more complicated for anyone who works with a nonprofit to understand how they might be affected. For a long time, the…
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Estate of Thompson: Respecting the Formalities of the Family Limited Partnership
The article discusses the use of family limited partnerships (FLPs) in estate planning. It gives an example of a case where the IRS scrutinized the use of FLPs for tax purposes. In this case, a man named Theodore Thompson set up two FLPs with his children to reduce estate tax. However, the IRS determined that…
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Family Limited Partnerships: To Qualify or Not to Qualify for the Bona Fide Sale for Full and Adequate Consideration Exception Under §2036
The recent cases have looked at whether certain rules apply to FLPs, and how to avoid those rules. The focus is on a specific exception that allows for a genuine sale of property. This article will analyze those cases and discuss ways to plan to avoid the rules by meeting the exception. This exception is…
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Estate Planning During Turbulent Times
Low interest rates and market downturns can create opportunities to transfer wealth to the next generation without paying taxes. This can be done through techniques like giving gifts, making loans within the family, or setting up trusts. The IRS sets minimum interest rates for these transactions, which can affect how much wealth can be transferred…
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Family Limited Partnerships: Are They Still Alive and Kicking?
About a year ago, a lawyer wrote an article about family limited partnerships in The Florida Bar Journal. Since then, the IRS has won two cases involving family limited partnerships. The article discusses these recent cases and provides tips on how to avoid making the same mistakes. It also talks about a survey that showed…
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The Testamentary Charitable Lead Annuity Trust Revisited
A testamentary charitable lead annuity trust is a great way for wealthy clients to give to charity and still provide for their family. It pays money to charity for a certain period of time, and then the remaining assets go to the family. The estate gets a tax deduction for the money given to charity.…
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Section 2053 Final Regulations: Continued Uncertainty?
The Treasury Department issued new regulations for deducting expenses and debts when someone dies. The rules say that you can only deduct these expenses if they have been actually paid. If you owe money to someone, you have to pay it before filing the tax return. There are a few exceptions to this rule, like…
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Estate Planning: The Clock is Ticking Use it or Lose it Before 2013
In 2010, President Obama signed a law that changed the estate, gift, and generation-skipping transfer (GST) tax rates and exemptions. These changes will end in 2012, and if new laws aren’t passed, the old tax rates and exemptions will come back in 2013. This means that people should consider using the new tax laws to…
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Chinks in the Armor: Current Trends in Limited Liability Company Structure After Olmstead
This article is about different types of businesses and how they protect the owners’ assets from outside creditors. It explains that corporations have been around for a long time and one of their main benefits is that they protect the owners’ assets from claims against the business. It goes on to talk about how sometimes…
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Navigating the Minefield of Settlements: A Primer on Tax Issues for the Probate and Trust Litigator
In tough economic times, there are more disputes over wills and trusts. This is because more people know their rights and the legal documents are more complex. As a result, lawyers who handle these cases are seeing more business. I’ve helped these lawyers with tax issues in these cases. This article is meant to help…
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Rethinking I.R.C. §2701 in the Era of Large Gift Tax Exemptions
For individuals or couples with a net worth of $5-10 million, there are new opportunities to transfer assets and minimize taxes as the tax exemptions have increased. One way to do this is through a “freeze partnership,” which allows for transferring appreciation of assets to younger generations while keeping control and access to income. This…
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It’s 2013: Now What?
In 2011 and 2012, lawyers were advising clients about tax and estate planning opportunities to transfer up to $5 million tax-free. However, Congress passed the American Taxpayer Relief Act of 2012 (ATRA) at the beginning of 2013, making the planning efforts unnecessary in many cases. ATRA maintains the $5 million exclusion amount and other important…
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State Income Tax Planning for the Nonresident Floridian: The ING Trust
Florida is a great place to live because there’s no state income tax. Many people move here from other states and keep ties to their old state. Florida lawyers have to know about tax laws in other states to help their clients. Some people use a special kind of trust to avoid paying income tax…
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Estate Planning with Carried Interests: Navigating I.R.C. §2701
Private equity firms and hedge funds are moving to Florida to take advantage of tax savings. Fund managers control and invest in these funds to make profits. They get a share of the profits (called a “carried interest”) in exchange for their services. Other investors, like pension plans and wealthy individuals, also invest in these…
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Florida Family Trust Companies: Tax and Nontax Considerations
If a family-run investment company wants to avoid SEC regulation, it can qualify for exemptions. One way is if it only serves family members and is owned and controlled by family members. Another way is if it follows state regulations instead of SEC rules. Using a family-run investment company for family trusts can cause tax…